Asia FX Slammed by Recession Jitters, Yen Slips Past 150 on Hot CPI

Asia FX Slammed by Recession Jitters, Yen Slips Past 150 on Hot CPI
Asia FX Slammed by Recession Jitters, Yen Slips Past 150 on Hot CPI

By Ambar Warrick– Asian currencies fell sharply on Friday, with the Japanese yen hitting a new 32-year low against the dollar as a spike in Treasury yields and growing fears of a U.S. recession depleted appetite for risk-heavy assets.

The sank 0.1%, reaching a 32-year low of 150.29 to the dollar after data showed Japanese hit an eight-year high in September. The reading points to more pressure on the world’s third-largest economy in the coming months, and will also provide headwinds to the as it struggles to maintain its accommodative stance.

Short sellers of the yen were undeterred by verbal threats of foreign exchange intervention by the Japanese government. The government’s intervention in September had only temporarily paused the yen’s descent, which is down nearly 31% this year. The Japanese currency is also set to lose 1% this week in its tenth straight week of losses.

The slipped 0.4% on Friday and traded near a 14-year low against the dollar, amid growing uncertainty over the Chinese economy after the delay of key third-quarter GDP data. The fell 0.1% and traded close to record lows.

Reports of easing quarantine measures in Beijing did little to lift sentiment towards the country, given that President Xi Jinping signaled earlier this week that China’s strict zero-COVID policy is here to stay.

Asian currencies were hit hard by a spike in U.S. Treasury yields this week, following a series of hawkish comments from Federal Reserve officials. The hovered near record lows, while the led losses across Southeast Asia with a 0.6% drop. The fared slightly better than its peers, falling only 0.2% after the central bank hiked by 50 basis points on Thursday.

Philadelphia Fed President Patrick Harker warned that the central bank is actively trying to slow the economy to combat , fueling concerns that rising U.S. interest rates will trigger a recession in the world’s largest economy.

His comments added more fuel to a rally in Treasury yields, with rising 0.9% to their highest levels since the 2008 financial crisis.

The also steadied on Friday, sticking around the 113 level, as did . But the greenback was set for mild weekly losses.

Elsewhere, the fell 0.3% in volatile trade after UK Prime Minister Liz Truss after only six weeks in the role. Gilt yields surged nearly 2%.

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